Monday, July 13, 2015

Finland's Grand Committee on Greece

Finland's Grand Committee had a meeting last Saturday about it's policy on Greece. Grand Committee is a compromise between having a two chambers or not. Grand Committee usually has members from all of the parties represented in the Eduskunta (Parliament), and it's foremost duties include issues concerning European Union, and law proposals that has been passed to a second round for amendments.

In case somebody is wondering how the Parliament felt about the Greece's situation you might be interested in these minutes. I could not find them in English so I have taken this opportunity to translate the minutes. Everything inside brackets are my own comments to give background information and it might not be completely unbiased. I'm solely responsible if something is lost in the translation or if the translation is inaccurate on any accounts. Also, keep in mind that politician's don't always speak the language that you would hear in a pub. Viewer discretion is highly recommended due to these limitations.

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"Item 3 - Eurogroup 11.7.2015

Meetings of European Council and European Union's councilsEUN 41/2015 vp [link is broken or unpublished]

Preparation

Following were heard by the Committee:
- Minister [of Finance] Alexander Stubb

Assisted by Secretary of the State Olli-Pekka Heinonen, Secretary of the State Martti Hetemäki, Ministerial Adviser Minna Aaltonen, Financial Secretary Jouni Lehto [from] the Ministry of Finance.

Follow-up Letter EJ 14/2015 vp (E 137/2014 vp) has been received by Eduskunta [the parliament]. The Minister Stubb and the Secretary of the State Heinonen outlined Finland's Policy [so far].

The floor was given to MPs Tuppurainen, Arhinmäki, Elo, Biaudet, Jalonen, Essayah, Haavisto, Harakka, Mykkänen, Kalmari and Vice Chairman Pekkarinen. Minister Stubb, and Secretaries of the State Heinonen and Hetemäki, and the Secretary of Finances Lehto then answered to queries.

The Grand Committee pointed out that the item in hand involving the contents of the Follow-up Letter EJ 14/2015 vp (E 137/2014 vp), the position of the Government, and the discussion made in the [Grand] Committee is a matter of discretion on the grounds of the Constitution§ 50 subsection 3 to secure the negotiations. During the discussion the Chairman Virolainen made the following basic proposal as the position of the Grand Committee: Committee agrees with the Government's Policy.The meeting was suspended at 16.34, and it was adjourned at 16.50.MP [Johanna] Karimäki made the following proposal for the Grand Committee to approve as it's position supported by MP [Eva] Biaudet:

"Finland's objective of negotiations should be to secure the stability, the unity and the future of the Eurozone. Greece has made a new request for a new loan program via ESM [European Stability Mechanism], experts have given their views of the Greece's reform proposals, and the Greeks have indicated through a referendum that they want a change.

The evalution given by the Institutions were presented to the Grand Committee only verbally. According to the statement the Government's position is against the recommendations of the Institutions. The Grand Committee acknowledges that the evaluation should have been trusted. The growing humanitarian crisis has to be stopped, people should be able to fulfil the requirements for living in the whole of European Union. It is in the core of the European values. The legitimacy of European Union is based on this.

Finland's overall liabilities should not necessarily be increased as there is still capital in ESM to cover Greece's third loan program. In the long run it should not be a threshold question should the capacity of the crisis solving mechanism be increased if the stability of the Eurozone requires it. Crisis solving mechanism to maintain the stability of the Eurozone has been proven to be a success. For example, Portugal and Cyprus have been able to get their economy on a more sustainable foundation due to the support program.

For the last five years we have been solving the crisis by saving banks. According to experts 75 per cent of the benefits of the European Union and other creditors went to international banks. Most of the benefits went to Germany. In a normal market economy banks and the investors would have carried the risk. Cuts in the Greece have been substantial, and most of it is being paid by people who are already in the low income and unemployed. This does not remove the fact that Greece needs to do systematical reforms to expand the foundation of taxes and to tackle the grey economy, tax evasion and corruption. Also the reform of pension scheme should be continued so that the raise of the pension age would not only affect the now young generation. Greece's government should be able to decide what are the reforms that provide the best growth.

Big part of the Greece's economical problems and the amount of the debt is derived from domestical problems. But also a very big part is derived from the financial crisis and the bank saving operation. This has to be acknowledged when we are thinking about the terms of a compromise.

Uncontrollable exit of the Greece from Euro would lead to a long-term instability which could in the worst case expand to a European wide crisis. The objective should be to keep all the current Eurozone states in using common currency. In case the Greece exits the euro it would be probable that the Greece would not pay their debts. Also the risk of Finland losing all it's receivables is high.

The terms and conditions of the crisis countries' support programs or loans should be able to be readjusted if the crisis countries implement healthy reforms for their economies and if the readjustment is to secure the well-being for the whole Eurozone and Finnish economy. Support programs are to be implemented in the matter that they support employment and growth. Principal is that the loans given out through the support mechanism will be paid back.

Greece's government needs room to choose their economical means to get by the crisis, but we also need to to see true commitment to necessary reforms. Syriza needs to be held responsible for credible accounting. In the mean time EU and Finland should be prepared to give humanitarian aid immediately if the whole economical system of Greece, and the availability of groceries and medicine collapses in the immediate following days.

[Grand] Committee expects that the negotiations are driven to find a compromise that secures Finland's and Europe's interests, secures our receivables, secures the stability of Eurozone, and is fair to Greece and to their ability to see growth as a part of the union of common currency. From this position Finland can agree that we will negotiate with Greece about the ESM program."

MP Karimäki's proposal lost the vote by 17-4, 4 abstained. MP Arhinmäki made the following proposal for the Grand Committee to approve as it's position:

"Finland is prepared for a solution that enables Greece's economy to grow, unemployment to go down, stop the growing of the humanitarian crisis and is ready in principle to start the negotiations for the ESM program. Also as proposed by the so called Institutions (Comission, ECB, IMF) the Greece's proposal will be the foundation of the negotiations for ESM program.

Objective is that Greece can also pay back it's debts. Sustainability of Greece's debts might require restructuring of the debts.

Negotiations should include that Greece will make major reforms to tackle corruption, stop tax evasion and improve it's taxation. Also the pension scheme requires restructuring reforms."

Proposal was not put into a vote as it was unsupported.MP [Tytti] Tuppurainen made the following proposal for the Grand Committee to approve as it's position supported by MP [Riitta] Myller:

"Finland's government has been unable to acquire enough information and credible estimations of the situation in Greece to make decisions. Finland has to hold on to it's receivables negotiated through [our] liabilities."

MP Tuppurainen's proposal lost the vote by 17-8. [Grand] Committee approved the position of the Eduskunta: [Grand] Committee agrees with government's policy."****
It is also notable that even though the Grand Committee is formally representing the Parliament all the amendments to the Grand Committee's basic proposal came from the members of the opposition parties.

Hopefully this translation shows that not all of the Finland, or it's Parliament, is in anyway supporting the unreasonable terms that the Greece is presented with.